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Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base.
Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information:
Activity | Cost Driver | Amount | M | XY | ||||
Production setups | Number of setups | $ | 69,000 | 6 | 14 | |||
Material handling | Number of parts | 52,000 | 60 | 15 | ||||
Packaging costs | Number of units | 215,000 | 112,000 | 48,000 | ||||
$ | 336,000 | |||||||
What is the total overhead per unit allocated to Product M using activity-based costing (ABC)?
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$2.10
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$2.57
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$1.90
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$2.52
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